Exhibit 10.1
DIRECTOR STOCK AGREEMENT
This DIRECTOR STOCK AGREEMENT (this “Agreement”) is made as of March 8,
2005, by and among X’Xxxxxxxx Industries Holdings, Inc., a Delaware corporation
(“X’Xxxxxxxx”), ________________ (“Director”) and Bruckmann, Xxxxxx,
Xxxxxxxx & Co. II, L.P., a Delaware limited partnership (“BRS”).
X’Xxxxxxxx and Director desire to enter into an agreement pursuant to which Director
shall purchase, and X’Xxxxxxxx shall issue to Director, 8,100 shares of X’Xxxxxxxx’x
Series B junior preferred stock, par value $0.01 per share (the “Series B preferred stock”).
Certain definitions are set forth in Section 5 of this Agreement.
The parties hereto agree as follows:
1. Purchase and Sale of Series B preferred stock.
(a) Upon execution of this Agreement, Director shall purchase, and
X’Xxxxxxxx shall sell, 8,100 shares of Series B preferred stock at a price of $.01 per share.
X’Xxxxxxxx shall deliver to Director the certificate representing such shares of Series B
preferred stock, and Director shall pay to X’Xxxxxxxx an amount equal to $81.00 by check
to X’Xxxxxxxx.
(b) As a condition precedent to the purchase and sale of the Series B preferred
stock pursuant to the terms and conditions of this Agreement, Director shall become
party to the Stockholders Agreement by and among X’Xxxxxxxx, BRS and the
stockholders of X’Xxxxxxxx, dated as of November 30, 1999 (as amended, restated or
modified from time to time, the “Stockholders Agreement”) and the Registration Rights
Agreement by and among X’Xxxxxxxx, BRS and the stockholders of X’Xxxxxxxx, dated as
of November 30, 1999 (as amended, restated or modified from time to time, the
“Registration Rights Agreement”), in each case by executing and delivering a copy of the
Joinder to Stockholders Agreement and Joinder to Registration Rights Agreement in the
form of Annex A and Annex B, respectively, attached hereto.
(c) Within 30 days after Director purchases any Series B preferred stock from
X’Xxxxxxxx, Director shall make an effective election with the Internal Revenue Service
under Section 83(b) of the Internal Revenue Code and the regulations promulgated
thereunder in the form of Annex C attached hereto.
(d) In connection with the purchase and sale of the Series B preferred stock
hereunder, Director represents and warrants to X’Xxxxxxxx that:
i. The Series B preferred stock to be acquired by Director pursuant to
this Agreement shall be acquired for Director’s own account and not with a view
to, or intention of, distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Series B preferred stock shall not be
disposed of in contravention of the Securities Act or any applicable state
securities laws.
ii. Director is an accredited investor as such term is defined in
Regulation D promulgated pursuant to Section 4(2) of the Securities Act.
Director acknowledges and agrees that the Series B preferred stock is being
issued and sold in reliance on the exemption from registration contained in
Section 4(2) of the Securities Act and exemptions contained in applicable state
securities laws, and that the Series B preferred stock cannot and will not be sold
or transferred except in a transaction that is exempt under the Securities Act and
those state acts or pursuant to an effective registration statement under the
Securities Act and those state acts or in a transaction that is otherwise in
compliance with the Securities Act and those state acts. Director understands
that, other than as provided in the Registration Rights Agreement, he has no
contractual right for the registration under the Securities Act of the Series B
preferred stock for public sale and that, unless the Series B preferred stock is
registered or an exemption from registration is available, the Series B preferred
stock may be required to be held indefinitely.
iii. Director is a Director of X’Xxxxxxxx, is sophisticated in financial
matters and is able to evaluate the risks and benefits of the investment in the
Series B preferred stock.
iv. Director is able to bear the economic risk of his investment in the
Series B preferred stock for an indefinite period of time because the Series B
preferred stock has not been registered under the Securities Act and, therefore,
cannot be sold unless subsequently registered under the Securities Act or an
exemption from such registration is available.
v. Director has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of Series B preferred
stock and has had full access to such other information concerning X’Xxxxxxxx as
he has requested. Director has reviewed the Stockholders Agreement, the
Registration Rights Agreement, X’Xxxxxxxx’x Second Amended and Restated
Certificate of Incorporation and X’Xxxxxxxx’x By-Laws.
vi. This Agreement constitutes the legal, valid and binding obligation
of Director, enforceable in accordance with its terms, and the execution, delivery
and performance of this Agreement by Director do not and shall not conflict with,
violate or cause a breach of any agreement, contract or instrument to which
Director is a party or any judgment, order or decree to which Director is subject.
vii. Director has not taken any action that constitutes a conflict with,
violation or breach of, and the execution and delivery of this Agreement and the
other agreements contemplated hereby will not conflict with, violate or cause a
breach of, any noncompete, nonsolicitation or confidentiality agreement to which
Director is a party or by which Director is bound. Director agrees to notify
X’Xxxxxxxx’x Board of Directors of any matter (including, but not limited to, any
potential acquisition by X’Xxxxxxxx) which, to Director’s knowledge, might
reasonably be expected to violate or cause a breach of any such agreement.
viii. Director is a resident of the state of ___________.
(e) As an inducement to X’Xxxxxxxx to issue the Series B preferred stock to
Director, and as a condition thereto, Director acknowledges and agrees that neither the
issuance of the Series B preferred stock to Director nor any provision contained herein
shall entitle Director to remain as a Director of X’Xxxxxxxx or affect the right of
X’Xxxxxxxx to remove Director from the X’Xxxxxxxx Board of Directors at any time.
2. Vesting of Series B preferred stock.
(a) Except as otherwise provided in paragraph 2.(b) below, the Series B
preferred stock shall become vested in accordance with the following schedule, if as of
each such date Director continues to serve on the Board of Directors of X’Xxxxxxxx:
Cumulative Percentage of
Date Director Stock Vested
------------------------ ------------------------------------
February 1, 2006 20%
February 1, 2007 40%
February 1, 2008 60%
February 1, 2009 80%
February 1, 2010 100%
(b) If Director ceases to be a member of the Board of Directors of X’Xxxxxxxx
on any date after February 1, 2006, the cumulative percentage of Series B preferred stock
to become vested shall be determined on a pro rata basis according to the number of days
elapsed since the prior anniversary date. Upon the occurrence of a Sale of X’Xxxxxxxx
and if Director is still serving on the Board of Directors of X’Xxxxxxxx, all shares of
Series B preferred stock which have not yet become vested shall become vested at the
time of such event; provided that such accelerated vesting shall not become effective
until approved by the shareholders of X’Xxxxxxxx in accordance with the requirements of
§280G of the Internal Revenue Code of 1986 (as amended) and the regulations
thereunder. Shares of Series B preferred stock which have become vested are referred to
herein as “Vested Shares,” and all other shares of Series B preferred stock are referred to
herein as “Unvested Shares.”
3. Repurchase Option.
(a) In the event Director’s service on the Board of Directors of X’Xxxxxxxx is
terminated (the “Termination”) for any reason, the Series B preferred stock (whether held
by Director or one or more of Director’s transferees) will be subject to repurchase by
X’Xxxxxxxx and BRS (or its designee) pursuant to the terms and conditions set forth in
this Section 3 (the “Repurchase Option”).
(b) The repurchase price for each Unvested Share shall be the lower of (x) the
Original Cost of such share and (y) the Fair Value for such share. The repurchase price
for each Vested Share will be the Fair Value for such share, unless the Termination is by
X’Xxxxxxxx for Cause or as a result of Director’s voluntary resignation other than within
30 days following a Good Reason Event, in which case the repurchase price for each
Vested Share shall be the lower of (x) the Original Cost of such share and (y) the Fair
Value for such share.
(c) X’Xxxxxxxx may elect to purchase all or any of the Series B preferred stock
by delivering written notice (the “Repurchase Notice”) to the holder or holders of the
Series B preferred stock within 45 days after the Termination. The Repurchase Notice
will set forth the number of the Series B preferred stock to be acquired from each holder,
the aggregate consideration to be paid for such securities and the time and place for the
closing of such transaction. The number of shares to be repurchased by X’Xxxxxxxx shall
first be satisfied to the extent possible from the Series B preferred stock held by Director
at the time of delivery of the Repurchase Notice. If the number of the Series B preferred
stock then held by Director is less than the total number of the Series B preferred stock
X’Xxxxxxxx has elected to purchase, X’Xxxxxxxx shall purchase the remaining Series B
preferred stock elected to be purchased from Director’s Permitted Transferees (and, to the
extent X’Xxxxxxxx has permitted Director to transfer any of the Series B preferred stock to
any other third parties, such Persons shall be deemed Permitted Transferees unless agreed
by X’Xxxxxxxx), pro rata according to the number of the Series B preferred stock held by
such other holder(s) at the time of delivery of such Repurchase Notice (determined as
nearly as practicable to the nearest share).
(d) If for any reason X’Xxxxxxxx does not elect to purchase all of the Series B
preferred stock pursuant to the Repurchase Option, BRS (or its designee) shall be entitled
to exercise the Repurchase Option for all or any of the Series B preferred stock that
X’Xxxxxxxx has not elected to purchase (the “Available Shares”). As soon as practicable
after X’Xxxxxxxx has determined that there will be Available Shares but in any event
within 45 days after the Termination, X’Xxxxxxxx shall give written notice (the “Option
Notice”) to BRS (or its designee) setting forth the number of any Available Shares and
the purchase price for such Available Shares. BRS (or its designee) may elect to
purchase all or a portion of the Available Shares by giving written notice to X’Xxxxxxxx
within 30 days after the Option Notice has been given by X’Xxxxxxxx. As soon as
practicable, and in any event within ten days after the expiration of the 30-day period set
forth above, X’Xxxxxxxx shall notify Director as to the number of Available Shares being
purchased from Director by BRS (or its designee) (the “Supplemental Repurchase
Notice”). At the time X’Xxxxxxxx delivers the Supplemental Repurchase Notice to
Director, X’Xxxxxxxx shall also deliver written notice to BRS (or its designee) setting
forth the number of Available Shares which BRS (or its designee) is entitled to purchase,
the aggregate purchase price and the time and place of the closing of such transaction.
(e) The closing of the purchase of the Series B preferred stock pursuant to the
Repurchase Option shall take place on the date designated by X’Xxxxxxxx in the
Repurchase Notice or Supplemental Repurchase Notice, which date shall not be later
than the 60th day after the delivery of the later of such notices to be delivered (or, if later,
the 15th day after the Fair Value is finally determined) nor earlier than the fifth day after
such delivery. X’Xxxxxxxx and/or BRS (or its designee) will pay for the Series B
preferred stock to be purchased pursuant to the Repurchase Option by delivery of a
certified or cashier’s check or wire transfer of funds. The purchasers of the Series B
preferred stock hereunder will be entitled to receive customary representations and
warranties from the sellers as to title, authority and capacity to sell and to require all
sellers’ signatures to be guaranteed.
(f) Notwithstanding anything to the contrary contained in this Agreement, all
repurchases of the Series B preferred stock by X’Xxxxxxxx and/or BRS shall be subject to
applicable restrictions contained in the Delaware General Corporation Law and in
X’Xxxxxxxx’x and its Subsidiaries’ debt and equity financing agreements that are in effect
as of the date of the closing of such repurchases. If any such restrictions prohibit the
repurchase of the Series B preferred stock hereunder which X’Xxxxxxxx and/or BRS is
otherwise entitled to make or if such repurchase would cause a default under any of
X’Xxxxxxxx’x and/or its Subsidiaries’ debt and/or equity financing agreements, X’Xxxxxxxx
may offer to repurchase the Series B preferred stock with a subordinated note bearing
interest at a rate equal to the prime rate as reported in the Wall Street Journal plus 2% per
annum due on February 1, 2011 and Director may choose to either accept the note or
extend the repurchase period for one year during which X’Xxxxxxxx may repurchase the
Series B preferred stock pursuant to the terms and conditions of this Section 3. If
X’Xxxxxxxx and/or BRS do not repurchase the Series B preferred stock during the one-
year period following the date of Termination, the repurchase rights shall be of no further
force and effect.
4. Restrictions on Transfer. Director shall not sell, transfer, assign, pledge or
otherwise dispose of any interest in any shares of Series B preferred stock, except in compliance
with the Stockholders Agreement. The certificates representing the Series B preferred stock
shall bear the legend set forth in Section 6 of the Stockholders Agreement.
5. Definitions.
(a) The “Fair Value” of each share of Series B preferred stock shall be as
determined by the Board in its good faith judgment. If Director disputes the Board’s
determination of Fair Value and Director and the Board are unable to reach agreement as
to the Fair Value within 60 days, X’Xxxxxxxx and Director shall seek an independent
appraisal of such Fair Value by an independent appraiser experienced in valuing
securities such as the Series B preferred stock and mutually agreeable to X’Xxxxxxxx and
Director, and the determination of such appraiser shall be final and binding upon
X’Xxxxxxxx and Director. The independent appraiser shall be instructed to determine Fair
Value as the amount that would be received by the holder of such share of Series B
preferred stock if all of the equity securities of X’Xxxxxxxx were sold to a buyer in a single
transaction and the proceeds from such transaction were allocated to the holders of equity
securities of X’Xxxxxxxx on a fully diluted basis as if the proceeds were distributed in a
liquidation of X’Xxxxxxxx pursuant to X’Xxxxxxxx’x certificate of incorporation. The cost
and expense of such appraisal shall be paid 50% by X’Xxxxxxxx and 50% by Director.
(b) “Original Cost” with respect to each share of the Series B preferred
stock means the amount paid by Director for such share.
(c) “Permitted Transferee” has the meaning given to it in the Stockholders
Agreement.
(d) “Person” means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency or
political subdivision thereof.
(e) “Sale of X’Xxxxxxxx” has the meaning given to it in the Stockholders
Agreement.
(f) “Securities Act” means the Securities Act of 1933, as amended from time
to time.
(g) “Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled (without
regard to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a limited liability company, partnership, association or other business
entity, a majority of the limited liability company, partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by any Person or
one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a limited
liability company, partnership, association or other business entity if such Person or
Persons shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control the managing
director or general partner of such limited liability company, partnership, association or
other business entity.
6. Notices. Any notice provided for in this Agreement must be in writing and must
be either personally delivered, mailed by first class mail (postage prepaid and return receipt
requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the
address below indicated:
To Director:
[Director Name]
[Address]
Facsimile:
e-mail:
To X’Xxxxxxxx:
X’Xxxxxxxx Industries Holdings, Inc.
00 Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
e-mail: xxx.xxxxxx@xxxxxxxxx.xxx
With a copy, which shall not constitute notice to X’Xxxxxxxx, to:
X’Xxxxxxxx Industries Holdings, Inc.
0000 Xxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Facsimile: (000) 000-0000
e-mail: xxxxxxx.xxxxxx@xxxxxxxxx.xxx
or such other address or to the attention of such other person as the recipient party shall have
specified by prior written notice to the sending party. Any notice under this Agreement shall be
deemed to have been given when so delivered or sent or, if mailed, five days after deposit in the
U.S. mail.
7. General Provisions.
(a) Transfers in Violation of Agreement. Any Transfer or attempted Transfer
of any Series B preferred stock in violation of any provision of this Agreement shall be
void, and X’Xxxxxxxx shall not record such Transfer on its books or treat any purported
transferee of such Series B preferred stock as the owner of such stock for any purpose.
(b) Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other jurisdiction, but this
Agreement shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, the Stockholders Agreement, the
Registration Rights Agreement and the Joinders to each of the Stockholders Agreement
and the Registration Rights Agreement embody the complete agreement and
understanding among the parties and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
(d) Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together constitute one
and the same agreement.
(e) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by Director,
X’Xxxxxxxx and their respective successors and assigns; provided, that the rights and
obligations of Director under this Agreement shall not be assignable except in connection
with transfers to Permitted Transferees.
(f) Choice of Law. The corporate law of the State of Delaware shall govern
all questions concerning the relative rights of X’Xxxxxxxx and its stockholders. All other
questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by, and construed in accordance with, the internal law, and
not the law of conflicts, of the State of New York, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction other than
the State of New York.
(g) Jurisdiction. Each of the parties hereto submits to the jurisdiction of any
state or federal court sitting in New York, in any action or proceeding arising out of or
relating to this Agreement and agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court and hereby expressly submits
to the personal jurisdiction and venue of such court for the purposes hereof and expressly
waives any claim of improper venue and any claim that such courts are an inconvenient
forum. Each of the parties hereby irrevocably consent to the service of process of any of
the aforementioned courts in any such suit, action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to its address set forth in
Section 6, such service to become effective 10 days after such mailing.
(h) Remedies. Each of the parties to this Agreement shall be entitled to
enforce its rights under this Agreement specifically, to recover damages and costs
(including reasonable attorney’s fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The parties hereto agree
and acknowledge that money damages would not be an adequate remedy for any breach
of the provisions of this Agreement and that any party may in its sole discretion apply to
any court of law or equity of competent jurisdiction (without posting any bond or
deposit) for specific performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
(i) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of X’Xxxxxxxx and Director.
(j) Descriptive Headings; Construction. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement. The parties to this Agreement have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement. The word
“including” shall mean including without limitation.
(k) No Third-Party Beneficiaries. This Agreement is for the sole benefit of
the parties hereto and their permitted successors and assigns and nothing herein
expressed or implied shall give or be construed to give any Person, other than the parties
hereto and such permitted successors and assigns, any legal or equitable rights hereunder.
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[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this Director Stock
Agreement on the date first written above.
X’XXXXXXXX INDUSTRIES HOLDINGS, INC.
By: ____________________________________
Xxxxxx X. Xxxxxx
President and Chief Executive Officer
__________________________________________
[Director Name]
Agreed and Accepted:
BRUCKMANN, XXXXXX, XXXXXXXX & CO. II, L.P.
By: BRSE, L.L.C.
Its: General Partner
By: ____________________________________
Xxxxxx X. Xxxxxx
Managing Director
CONSENT
The undersigned spouse of Director hereby acknowledges that I have read the foregoing Series B
preferred stock Agreement and that I understand its contents. I am aware that the Agreement
imposes restrictions on the transfer of my spouse’s shares of Series B preferred stock under certain
circumstances. I agree that my spouse’s interest in the Series B preferred stock is subject to this
Agreement and any interest I may have in such Series B preferred stock shall be irrevocably bound
by this Agreement and further that the my community property interest, if any, shall be similarly
bound by this Agreement.
I am aware that the legal, financial and other matters contained in this Agreement are complex and
I am free to seek advice with respect thereto from independent counsel. I have either sought such
advice or determined after carefully reviewing this Agreement that I will waive such right.
Name of Spouse: _______________________ ______________________________
Signature
______________________________
Witness
